Real estate market report from the Notaries of France, April 2025

Fragile recovery

The peak in annual growth was reached in February 2024 at -23,4% year-on-year; the annual decline is now -3,6% and is being absorbed month after month. The number of transactions has stabilized and the market finally appears to be entering its recovery phase. However, it will have declined by 35,6% between August 2021 and October 2024, bringing current volumes to a level lower than those existing 20 years ago.

Prices in the stabilization phase

In metropolitan France, year-on-year prices are now falling at a slower pace, falling by 2,1% in the fourth quarter of 4. Prices are down 2024% for apartments and 1,8% for houses. It should be noted that over three months, prices for existing homes in metropolitan France are virtually stable at +2,3% for the second consecutive quarter. According to preliminary contract projections, prices are expected to increase very slightly by the end of May, by around +0,1% year-on-year.

Whether for houses or apartments, annual price increases would remain low, not exceeding 1% in both markets.

In the provinces, existing housing prices are falling year-on-year, but at a slower pace, falling by 1,7% in the fourth quarter of 4. The price decline remains more pronounced for houses (-2024%) than for apartments (-1,9%). Over three months, existing housing prices are virtually stable (+1,2%) for the second consecutive quarter. Projections predict the start of a price stability phase, with a +0,1% increase by the end of May.

In the Île-de-France region, existing housing prices continue to decline, but at a slower pace, reaching -3,6% in the fourth quarter of 4. They will fall more sharply for houses (-2024%) than for apartments (-5%). Apartment prices continue to decline year-on-year in Paris (-2,9%), as well as in the inner suburbs (-3%) and outer suburbs (-3,2%). Over three months, existing housing prices in the Île-de-France region are down slightly at -1,8%. According to projections, prices are expected to change little over the coming months. In Paris, prices per square meter are still expected to be around €0,2 per square meter, once again confirming the trend toward stabilizing values.

Measured caution

The beginning of 2025 marks the generalization of stabilization, whether for volumes or prices, but also in the production of credits. Considering the disinflation process on track and hoping thus to counter the effect of trade tensions which threaten growth in the euro zone, the ECB has decided to lower its key rates for the seventh time since June 2024[2]. Necessarily and month after month, the borrowing capacity of potential buyers improves, as spring approaches, the traditionally decisive season for the real estate year

Across France, notary offices are seeing a resurgence in activity, which is nonetheless expressed more in terms of preliminary contracts than completed sales. But this recovery may appear to be hampered by the anticipation of the implementation of the increase in transfer taxes for consideration, voted by most departments and already effective in a large proportion. Similarly, the price correction will not have been strong enough to bring a significant number of buyers back to the market. Prices may, here and there, start to rise again. And this, even though volumes have not yet clearly returned to a positive direction, going against traditional paradigms and proving that many sellers have bet on the drop in rates, putting their impact on the real estate purchasing power of the French. Given the price increases of recent years, however, there is nothing prohibitive. In a market where buyers seem to have regained control with a proven appetite for property purchases, price levels sometimes remain too high and if they were to start rising again, the property market could be forced to reverse again.

Indeed, beyond these rather comforting intrinsic signs, uncertainties persist externally, particularly political and economic, which could influence the market's trajectory and its fragile recovery. In March 2025, household confidence fell slightly[3] and some banks were able to marginally increase their borrowing rates at the beginning of April. The consequences of American economic policy are accentuating the climate of ambient uncertainty and could impact real estate in the medium term through wait-and-see attitudes. At the same time - should we be reassured? - the volatility of the financial markets could benefit safe investments, such as government bonds or real estate, a safe haven appreciated by the French, which currently offers the necessary conditions for investment. It also seems that the arguments in favor of a further cut in ECB rates are in place, with the expected economic slowdown offsetting the inflationary effect on prices. Sellers must know how to seize the moment and remain open to a sometimes essential price adjustment.

As for the new-build market, which has already been in an economic impasse for several years with a collapse in permits issued, construction starts, and transactions, despite some price reductions (when possible), it could suffer even more from the consequences of the increase in customs duties. This could lead to a further increase in the price of materials and construction costs. Adjusting regulatory requirements could prove useful in countering the effects of these new constraints and finally facilitating the production of new housing.

A clear and ambitious public policy aimed at boosting the real estate market and making home ownership more accessible to a greater number of households remains essential. The expansion of the zero-interest loan (PTZ) is a step in this direction, strengthening options for first-time buyers, a generally younger population that cannot afford to do without financing, in part or in full.

The French have a definite appetite for real estate. But they are sensitive to a stable economic and political environment, a guarantee of confidence.

Personal credit - Banque de France data Results at the end of February 2025[4]

Increased production of housing loans in February 2025

The year-on-year production of housing loans (excluding renegotiations) increased in February 2025 to €10,7 billion (after €9,9 billion in January 2025), up 55% compared to the same month last year (€6,9 billion in February 2024). This increase accompanied the further decrease in the average interest rate on housing loans granted in February, which stood at 3,27% for transactions excluding renegotiations after 3,32% in January, and returned to the levels observed in June 2023.

The use of the flexibility margin authorized by the HCSF standard stood at 15,3% in February 2025, still below the 20% limit.

The green value of housing: The share of energy-intensive housing sold in 2024 is slightly decreasing

Since 2021, the method for calculating the Energy Performance Diagnosis (DPE) has undergone various changes, and energy-intensive properties are gradually being excluded from the rental market. One of the latest reforms dates back to July 2024: the calculation method for homes of less than 40 m² has been revised to better comply with the specific characteristics of small surfaces. For some of these properties, this measure allows them to benefit from a favorable reassessment of their label.

In this context, in metropolitan France (excluding Corsica), the share of sales of existing F and G-classified homes increased significantly in 2022 (+5 points), then to a lesser extent in 2023 (+1 point). In 2024, this proportion is slightly down by 2 points, reaching 15%. Regarding the share of sales of the most energy-efficient homes (classes A and B), it remained stable, at around 6% in 2023 and 2024. The decline in the proportion of the most energy-intensive homes exclusively affects the individual market. Indeed, existing F and G-class homes represented 20% of the market in 2023 compared to 17% in 2024.

The decline in the share of sales of the most energy-intensive homes is felt in all regions of metropolitan France (excluding Corsica), with the exception of Paris, where it remained stable at 31%, and in the inner suburbs, where it increased by 5 points, reaching 21%. For the other regions, the proportion of these homes decreased by 1 or 2 points, except for the outer suburbs, where the decline was 6 points.

[1] Transaction volumes in France, all departments, excluding Mayotte

[2] ECB - Monetary policy decisions of 17 April 2025

[3] - www.insee.fr/fr/statistiques/8538728

[4] - www.banque-france.fr/system/files/2025-04/FR_Stat_info_Credits_aux_particuliers_202502.pdf

Illustrative image of the article via Depositphotos.com.